Ship op­er­at­ing costs down again in 2015

Financial Mirror (Cyprus) - - FRONT PAGE - By Richard Greiner

To­tal an­nual op­er­at­ing costs in the ship­ping in­dus­try fell by an av­er­age of 2.4% in 2015, ac­cord­ing to OpCost 2016, Moore Stephens’ unique ship op­er­at­ing costs bench­mark­ing tool.

This com­pares with the 0.8% av­er­age fall in costs recorded for 2014. All cat­e­gories of ex­pen­di­ture in 2015 were down on those for the pre­vi­ous 12 month pe­riod.

To­tal op­er­at­ing costs for the tanker, bulker and con­tainer ship sec­tors were down in 2015, the fi­nan­cial year cov­ered by the study. On a year-on-year ba­sis, the tanker in­dex was down by 4 points, or 2.2%, while the bulker in­dex fell by 6 points, or 3.6%. The con­tainer ship in­dex was also down by 6 points, or 3.7%. The cor­re­spond­ing fig­ures in last year’s OpCost study showed falls of 2 points in both the tanker and con­tainer ship in­dex, and of 1 point in the bulker in­dex.

There was a 1.2% over­all av­er­age fall in 2015 crew costs, com­pared to the 2014 fig­ure. Tankers over­all ex­pe­ri­enced a fall in crew costs of 1.3% on av­er­age, com­pared to the 0.4% fall recorded in 2014. Crew costs were also down for bulk­ers and for con­tainer ships, by 1.1% and 3.3% re­spec­tively.

Ex­pen­di­ture on stores was down by 4.3% over­all, com­pared to the fall of 2.4% in 2014, while there was an over­all fall in re­pairs and main­te­nance costs of 4.3%, com­pared to the 0.6% re­duc­tion recorded for 2014. The over­all drop in costs of 3.2% recorded for in­sur­ance, mean­while, com­pared to the 0.4% fall recorded for 2014.

This is the fourth suc­ces­sive year-on-year re­duc­tion in over­all ship op­er­at­ing costs.

The re­duc­tion is three times that recorded 12 months ago, and had not been widely an­tic­i­pated. It is likely to be due in part to con­tin­u­ing good hus­bandry in a dif­fi­cult op­er­at­ing en­vi­ron­ment, and partly to an ex­tremely dif­fi­cult mar­ket and wider eco­nomic cli­mate.

The ship­ping sec­tor can draw some com­fort from a fourth suc­ces­sive an­nual fall in op­er­at­ing costs. But it should re­mem­ber that costs can move both ways. How­ever, in­fla­tion­ary pres­sures on op­er­at­ing costs will re­main. To be com­pet­i­tive, ship own­ers will need to con­tinue to im­prove ef­fi­ciency, in­no­vate with new tech­nol­ogy and har­ness the con­sid­er­able ben­e­fits of ‘big’ data with­out de­lay.

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